Residential property prices in the UK went up 1.2% in October and are now 7.1% higher than at their lowest point this year, according to the latest index to be published.

It is the fourth consecutive month in a row that the index from the Halifax shows prices increasing. Nationally prices have risen 2.9% since the end of 2008 but they are still 4.7% below what they were a year ago, it says.

The report also shows that property transaction volumes are up slightly. The improved market is due to increased demand and fewer houses up for sale, according to the Halifax.

‘Demand for houses has risen in recent months due to the very low level of interest rates, the decline in property prices since the summer of 2007 and a pick-up in consumer confidence on the back of better economic news,’ said Martin Ellis, the Halifax’s housing economist.

However, the Halifax cautions that the current momentum is unlikely to continue, since more homes are being put up for sale and this will, in turn, result in a slowdown in the demand for homes.

The index follows data earlier this week from housing intelligence company Hometrack that said the housing market is likely to slow since the rise in potential buyers seen recently is dwindling on the back of higher prices.

The Nationwide has also reported increased prices for October. Its index said house prices were up by 0.4% in October and 2% higher than in October last year, the first annual rise since March 2008.

Many economists, however, including those from the Ernst & Young ITEM Club, Jones Lang La Salle and Capital Economics have all warned of a potential double dip in the UK property market.

At a local level though, estate agents are reporting improvements in the market. The latest data from Winkworth shows that the numbers of inquiries from first time buyers are rising and now make up 32% of queries in their offices across the country. This compares with just 19% last year. They though are still well below the number at the peak of the market where they made up 55.8% of inquiries.